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TUC is fighting the wrong battle ....

Wed, 23 Oct 2013 Source: Baidoo, Philip Kobina

......on the utility tariffs

Every good examiner will tell you that understanding a question is half of it solved. The raft of challenges that confront us, as a nation, are uncountable. It is imperative that we have a comprehensive understanding of the problems. Defining them and knowing their heartbeat is half of the journey covered. It is waste of time and space to reiterate the fact that corruption is a huge debilitating factor in the progress of the country. But that is not what entirely defines our lack of progress presently. The crux is defined on so many fronts, for example, the anaemic productivity level, obsolescence and incompetence that gives rise to judgment debt, to name but a few.


The tariff increment, which has become a hot and volatile topic, is an unavoidable reality, which, in part, is being fuelled from outside. As China and India continue to lift their people out of abject poverty their energy consumption will continue to increase exponentially. This tightens the competition for global energy reserves like oil. The effect is being experienced by even the advanced countries. However, in Ghana it has an escalating factor – the internally generated inflation. It is a perennial shock that sends the economy into a cardiac arrest each time workers agitate for salary increases.


Don’t get me wrong, we do have imported inflation, especially when the price of crude oil skyrockets on the global market. On the other hand, they do stabilise and sometimes fall. For example, before the world economy crushed in 2007 the price of crude oil rose to an unsustainable level of $147 per barrel. It disrupted economies around the globe, and recession took hold. As a result of fallen demand, prices fell and currently hovers around $105 a barrel. It stands to reason that, if crude oil is the only factor that determines inflation in Ghana, as has always been trumpeted by our leaders, then they should even out when the prices come down or stabilise. But since 1992, and even prior to that, inflation has mostly inched above single digits. At a point in time it rose into the region of the 60th percentile per annum and above. Sadly, this happened when the price of crude oil increased by an average of 7%, which was relatively a stable increment.


For imported inflation, there is not much that we can do to keep away as long as we live in a global economy. It is an unavoidable shock, but its impact is not as damaging as the one fuelled from within. Our main stay is agriculture, and productivity is very low mainly due to obsolescence. Though, it is a problem; it is not. The flipside is such that we only have to cut our coat according to our size. We cannot spend what we don’t have. The only snag is that majority of the population will be living a life of subsistence, which is a testament to the misappropriation of our priorities. We are maintaining a bloated army of civil servants being paid handsomely, and producing next to nothing. In most cases they are even a hindrance to progress, because of the bribes and delays they put in the paths of the users of the services they provide. For example, poor people with original ideas to move the country forward are prevented from contributing their quota.


Currently, the TUC finds itself in a pickle. The reduction they are asking for is going to curb the utility companies’ ability to invest and ensure continuous improved services. For practical analysis, let us imagine that the thermal plant at Aboadze makes provision for repairs next year that is going to cost GHc100. Now, based on supposition, let’s assume the national inflation rate is at 10%. That means by next year when the value of the currency has been reduced to 90%, Aboadze will need an additional GHc10 to be able to do the repairs, which will be passed on to the users of their service. Hence the cause is the inflation and not the recent arbitrary increment, which will happen again, next year if not nipped in the bud. Therefore, the TUC will have to redirect their arsenal. Maybe, it will affect them directly, but it is better than going through structural adjustment imposed from outside like Greece.

To part, I am going to take a swipe at the government to make a point. Their incompetence and inability to see into the future for the actions they take now is at the heart of this mess. People are blaming public sector salaries for this problem, but let us think a bit hard. We need our civil servants like teachers, doctors, police and nurses to be paid handsomely; they do a good job. The problem is the ghost names and inefficiency. Secondly, and perhaps most importantly, the millstone that is drowning the country is the creation of more civil service post to absorb party functionaries that we can do without. For example, the new 45 constituencies and districts were created last year when the debt burden was still climbing, besides knowing that our revenue base was equally not expanding in real growth terms. This is the cold heart incompetence of our leaders. The idea was proposed under Mills before he died. He did not object to it, and Mahama came and went along with it. Just sit back and calculate how much 45 new MPs and funding 42 new district offices and staff will cost. This is the killer poison that has been shoved down our throat. Our leaders should have spared us this banana republic idea, and everything could have been hunky-dory.


Philip Kobina Baidoo Jnr


London


baidoo_philip@yahoo.co.uk

Columnist: Baidoo, Philip Kobina